Six equity release myths busted

Here, we debunk equity release myths and explain the role equity release can play in boosting your finances

Here, we debunk equity release myths and explain the role equity release can play in boosting your finances

Although equity release has soared in popularity in recent years, many people still have misconceptions around how it works. These equity release myths often mean that people overlook the benefits of a lifetime mortgage. 

A lifetime mortgage, the UK’s most popular type of equity release scheme, enables you to access a portion of your home’s wealth as a tax-free lump sum. This sum, plus the interest accrued, need only be repaid upon your death or when you move into long-term care and your property is sold

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Equity Release grows 28% on 2020

Indeed, the number of customers who have used equity release to repay
their mortgages has almost doubled in 12 months

The number of customers who have used equity release to repay their mortgages has almost doubled in 12 months

In 2021, existing customers took an additional £494 million in drawdown and further advances to take the total amount released to £4.89 billion (FY 2020 – £3.88 billion). Interestingly, while the market hit new heights in FY 2021, this was driven by the size of the average amount released rather than the number of customers. This peaked in FY 2018 when 47,081 plans
were taken out.

In FY 2021, customers took out an average of £104,792 which is
substantially higher than the £84,919 (FY 2020) and £76,359 (FY 2019) taken in previous years. While after a challenging 2020, many had high hopes for 2021 returning to more normal market conditions. This was impacted by the ongoing threat of Covid which saw customers continue to focus on meeting pressing needs such as debt repayment or supporting wider families via gifting rather than discretionary spending on holidays or
home improvements.

Indeed, the number of customers who have used equity release to repay
their mortgages has almost doubled in 12 months from 20% (FY 2020) to
38% (FY 2021) while at the same time spending on holidays has fallen from
23% (FY 2020) to 7% (FY 2021). Still buoyed by the Stamp Duty Holiday
which finished at the end of September, 22% of equity release customers
used housing equity to support families (27% – FY 2020)

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Source: Key Market Monitor 2021 available to download here

Equity Release Q&A

Over this series we will be discussing the pro’s and cons of Equity Release, answering your questions and covering the questions we are most regularly asked.

What happens if I go into care?

 Over this series we will be discussing the pro’s and cons of Equity Release, answering your questions and covering the questions we are most regularly asked.

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